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March 1st, AmCham South China 2017 SPECIAL REPORT ON THE STATE OF BUSINESS IN SOUTH CHINA
released its 2017 White Paper on the
Business Environment in China and 2017 THE AMERICAN CHAMBER OF COMMERCE IN SOUTH CHINA
Special Report on the State of Business in South
China. To download this year's White Paper and Special Report, please scan the QR-code:
The 425-page White Paper, now in its ninth year, White Paper Special Report
presents a highly-researched, exhaustively-cited
account of the on-the-ground business environment reported no shift, 13.3% of wholly foreign-owned enterprises,
in China. The Paper argues that a shift in the 11.4% of joint ventures, and 26.67% of representative offices
investment practices of multinationals has begun and of foreign enterprises, representing a substantial number of
China must realize that, in order to not just attract respondents, replied that they had shifted some reinvestments
foreign investment but to retain foreign and Chinese to other Asian, ex-China destinations. Among the Chinese
investment in China, it will need to seriously compete company respondents, a significant percentage (17.6%) said that
with overseas destinations and begin to offer truly they had moved some reinvestments overseas to other Asian
attractive incentives which would finally put China at par destinations. Approximately 30% of respondents cited rising
with other global players. operational costs in China as a major driving factor for diverting
reinvestment to other destinations. Other major factors named
The 2017 Special Report on the State of Business, meanwhile, were the perceived uncertainty of market prospects in China,
aggregates and analyzes the experiences of more than 230 of the more attractive opportunities in competing destinations outside
companies who participated in the chamber’s annual State of of China and the fierce local competition in China due to an
Business Study. This year, 77.2% of participants reported that uneven playing field.
their primary business focus was providing goods or services to
the Chinese market, while only 22.8% reported a primary focus The Study further reveals that in 2016, 50% of multinationals
of manufacturing for export. with existing operations in China cancelled their reinvestments
of US$250 million or more, while at the same time, doubling
"South China, their reinvestments in the lower categories of less than US$250
Led by Guangdong, million. Also for 2017, 50% fewer multinationals have budgeted
reinvestments in the US$250 million or more category than
Best Place for last year. However, they have at the same time, doubled their
FDI in China."
The Study shows that an overwhelming majority of companies
consider the current business environment in South China to
be “good” or “very good”. At the same time, a similar majority
proved to harbor positive sentiments towards the China market,
replying that they feel “slightly optimistic” or “optimistic”
about the economy. The Study shows that in 2017 AmCham
South China members have budgeted to reinvest, from profits,
US$12.6 billion to expand existing operations in China, a 4.12%
decline from 2016.
The results of this year’s Study present a stark cause for grave
concern about the state of the Chinese economy and its current
trajectory. This is clearly evident when reviewing the result of
one of the new questions included in this year’s Study, which
stated: “Did your company shift any planned reinvestments
to other markets?” In 2016, although 29.9% of respondents
9
released its 2017 White Paper on the
Business Environment in China and 2017 THE AMERICAN CHAMBER OF COMMERCE IN SOUTH CHINA
Special Report on the State of Business in South
China. To download this year's White Paper and Special Report, please scan the QR-code:
The 425-page White Paper, now in its ninth year, White Paper Special Report
presents a highly-researched, exhaustively-cited
account of the on-the-ground business environment reported no shift, 13.3% of wholly foreign-owned enterprises,
in China. The Paper argues that a shift in the 11.4% of joint ventures, and 26.67% of representative offices
investment practices of multinationals has begun and of foreign enterprises, representing a substantial number of
China must realize that, in order to not just attract respondents, replied that they had shifted some reinvestments
foreign investment but to retain foreign and Chinese to other Asian, ex-China destinations. Among the Chinese
investment in China, it will need to seriously compete company respondents, a significant percentage (17.6%) said that
with overseas destinations and begin to offer truly they had moved some reinvestments overseas to other Asian
attractive incentives which would finally put China at par destinations. Approximately 30% of respondents cited rising
with other global players. operational costs in China as a major driving factor for diverting
reinvestment to other destinations. Other major factors named
The 2017 Special Report on the State of Business, meanwhile, were the perceived uncertainty of market prospects in China,
aggregates and analyzes the experiences of more than 230 of the more attractive opportunities in competing destinations outside
companies who participated in the chamber’s annual State of of China and the fierce local competition in China due to an
Business Study. This year, 77.2% of participants reported that uneven playing field.
their primary business focus was providing goods or services to
the Chinese market, while only 22.8% reported a primary focus The Study further reveals that in 2016, 50% of multinationals
of manufacturing for export. with existing operations in China cancelled their reinvestments
of US$250 million or more, while at the same time, doubling
"South China, their reinvestments in the lower categories of less than US$250
Led by Guangdong, million. Also for 2017, 50% fewer multinationals have budgeted
reinvestments in the US$250 million or more category than
Best Place for last year. However, they have at the same time, doubled their
FDI in China."
The Study shows that an overwhelming majority of companies
consider the current business environment in South China to
be “good” or “very good”. At the same time, a similar majority
proved to harbor positive sentiments towards the China market,
replying that they feel “slightly optimistic” or “optimistic”
about the economy. The Study shows that in 2017 AmCham
South China members have budgeted to reinvest, from profits,
US$12.6 billion to expand existing operations in China, a 4.12%
decline from 2016.
The results of this year’s Study present a stark cause for grave
concern about the state of the Chinese economy and its current
trajectory. This is clearly evident when reviewing the result of
one of the new questions included in this year’s Study, which
stated: “Did your company shift any planned reinvestments
to other markets?” In 2016, although 29.9% of respondents
9
